AUSTIN — An insolvent health insurance program for retired Texas teachers on fixed incomes will force them to pay much, much more for coverage if lawmakers don’t infuse the system with cash and let it dial back benefits, according to lawmakers and experts.

Painful changes are coming, no matter what, because over the next two years, the Teacher Retirement System of Texas’ “TRS-Care” program is expected to have nearly $1.1 billion less than it needs to pay the bills.

The 32-year-old program could buckle and begin to collapse in the 2018-2019 budget cycle unless lawmakers give it more money and flexibility to make plan changes before the session ends Monday, said key legislators and the head of a retiree group.

"I come from a family of teachers," said Rep. Trent Ashby, R-Lufkin. "I wanted to make sure they are treated fairly."

(File Photo 2013/Staff)

“If we don’t do something, TRS is genuinely concerned that they could go into a death spiral,” Houston GOP Sen. Joan Huffman, author of a stalled Senate overhaul bill, said of the health plans.

In that scenario, skyrocketing premiums in several current policies would stampede beneficiaries into a legally required “no cost” plan. Reeling from loss of income, the TRS “board would likely be obligated to close the TRS-Care plan and begin to phase out current participants,” according to a November report by a special House-Senate panel that studied the problem.

An alternate rescue bill by Rep. Trent Ashby, which is favored by many retirees, is scheduled for debate on the House floor Wednesday.

Inaction is not an option, said Ashby, a Lufkin Republican. He referred to a projected shortfall in TRS-Care of about $3 billion in 2020-2021. That’s down from an even higher deficit forecast just a few months ago — between $4 billion and $6 billion.

“You look at those out-year costs and we have to do something different,” he said.

At risk is health insurance for about 207,000 retired educators and 54,000 of their dependents. In Texas, 95 percent of school district employees haven’t paid into Social Security. For many, TRS’ annuity checks are their only source of retirement income.

Since 2001, lawmakers have let the retirement fund grant only one cost-of-living increase in those checks. Many live on $24,000 a year or less.

To offset some of the pain, as inflation ravaged retired teachers’ monthly checks, the Legislature’s budget writers often have included “intent” provisions that basically told the system not to increase premiums.

A 12-year freeze on premiums, relentless medical-care inflation and a surge in early retirees — who are more costly because they don’t qualify for the federal Medicare program — have capsized the retiree health plan’s finances. Last September, the pension system’s board imposed $40 million a year of increases in copays and other out-of-pocket costs for beneficiaries.

One early retiree, Helen Strohschein of Frisco, is very worried.

At 63, unable to qualify for Medicare for another couple of years, Strohschein said she’s grateful for coverage. She said she’s willing to pay even more — in the form of higher premiums and deductibles — if that’s what it takes to save the program.

“It would be devastating if they did nothing and I had absolutely no access to health insurance,” she said of lawmakers.

During her 36 years as a teacher, principal and director of instruction, Strohschein said she felt the state implicitly promised her adequate health coverage in retirement.

“I would just hope the state would step up and be willing to contribute more rather than passing all of the cost onto retirees,” she said.

Under both the House and Senate plans, the state would increase its current contribution of $321 million a year — or 1 percent of active school employees’ payroll. It would go to 1.25 percent of payroll, or about $405 million a year.

The Texas Retired Teachers Association, though, would like the state to bump that to 3 percent of payroll. Its executive director, Tim Lee, noted that retirees’ health coverage currently costs between $4.8 billion and $4.9 billion a year.

Sen. Joan Huffman, who heads the Senate State Affairs Committee, took the lead in drafting a bill to overhaul TRS-Care.

(File Photo 2013/Staff)

Huffman, who heads the Senate State Affairs Committee, took the lead in drafting a bill to overhaul TRS-Care. It would eliminate a decades-old catastrophic plan that’s been offered at no cost and let the retirement fund trim benefits and charge higher premiums for the other three plans and a Medicare Advantage plan the program offers.

Last month, though, she pulled it down from further consideration. Retirees needed more time to “become educated” and absorb the gravity of the situation, Huffman said this week.

Ashby copied her proposals to repeal laws requiring a no-cost plan and tying the hands of TRS board members and administrators on plan design and cost sharing.

Saying he very much wanted to have retirees “see a modest monthly increase in their health care premium,” however, Ashby and House leaders fashioned a more generous bailout that relies on tapping some of the $10 billion parked in the state’s rainy day fund.

His bill would give an additional $332.6 million toward the retiree health care shortfall, for a total of $500 million in the next two-year cycle. The Senate only would provide an extra $122.6 million, for a net two-year increase of $290 million. Its leaders have opposed using rainy-day dollars.

For retirees under 65, Ashby’s bill would impose monthly premiums of $200, which would climb gradually to $370 in 2021, with an annual deductible of $3,000. Huffman’s proposed deductible is $4,000 a year. Under her plan, the early retirees’ monthly premiums would begin at $250 and wind up at $430 four years from now.

Also, Ashby’s bill would force school districts to increase their contributions to TRS-Care by about $134 million over two years. Huffman said she opposes the move as “a cut to public schools.”

Strohschein, the retired teacher, said she probably can absorb whatever financial pain is coming. She's fortunate to have saved and had some years of a higher salary, which boosted her pension, she explained. But Strohschein worries about retirees with far less, she said.

“I’m not one of those who would not be able to eat or have to decide whether to buy a prescription or pay the rent," she said. "There are people out there who would face that situation.”

CORRECTION, 6:30 p.m. May 3, 2017: An earlier version of the TRS-Care "By the Numbers" chart in this story incorrectly described $13,640 as the cost of the average enrollee under age 65 in TRS-Care 3. That was the cost of a "non-Medicare-eligible" enrollee — most but not all of whom are under 65. Also, the $2,855 amount was incorrectly described as the cost of the average under-65 enrollee in TRS-Care's Medicare Advantage and Medicare Part D plans. Those enrollees are 65 or older.